Proceedings of the 8th International Conference on Intellectual ...

Rita Babiliūtė and Kęstutis Kriščiūnas
<strong>the</strong> emerging clusters, and mention <strong>the</strong> lack <strong>of</strong> inter-actor trust as one <strong>of</strong> <strong>the</strong> main obstacles for
industrial development. There is, however, a missing middle between <strong>the</strong> two perspectives that would
look into <strong>the</strong> possible ways <strong>of</strong> building and sustaining trust-based relations. Answering this question is
not easy because both trust and clusters are complex constructs with a variety <strong>of</strong> possible
combinations under different industrial and institutional contexts.
Therefore, this paper aims to establish <strong>the</strong> linkages between <strong>the</strong> different typologies <strong>of</strong> trust and <strong>the</strong>
variables <strong>of</strong> knowledge-intensive industrial clusters. Besides, it seeks to promote <strong>the</strong> discussion
regarding <strong>the</strong> possible approaches to management <strong>of</strong> trust. It builds on two <strong>of</strong> <strong>the</strong> major dimensions
<strong>of</strong> trust: inter-personal and institutional, as distinguished by various researchers (e.g. Rus and Iglič,
2005; Bachmann and Inkpen, 2011).
The first part <strong>of</strong> <strong>the</strong> paper is devoted to <strong>the</strong> discussion <strong>of</strong> <strong>the</strong> role and varieties <strong>of</strong> trust in <strong>the</strong> interorganizational
relations. The second part discusses <strong>the</strong> phenomenon <strong>of</strong> trust in knowledge-intensive
industrial clusters. Finally, we try to link <strong>the</strong> aspects <strong>of</strong> trust with different variables <strong>of</strong> <strong>the</strong> industrial
clusters and to see <strong>the</strong> relative importance <strong>of</strong> inter-personal and institutional trust. Some insights into
building and sustaining trust are also presented.
Dimensions <strong>of</strong> trust: inter-personal vs. institutional
The academic literature on trust provides a number <strong>of</strong> definitions and typologies <strong>of</strong> trust. The
sociologist Zucker (1986) makes a distinction between three major types <strong>of</strong> trust: 1) characteristicbased
trust that relies on <strong>the</strong> common social backgrounds <strong>of</strong> <strong>the</strong> actors (i.e. common ethnicity,
religion, language, family, etc.) as <strong>the</strong> basis for trust; 2) process-based trust that relies on <strong>the</strong>
experience <strong>of</strong> exchange; and 3) institution-based trust where trust is derived from formal social
structures (e.g. legal provisions, pr<strong>of</strong>essional associations, etc.). The latter represents not so much
trust in institutions (a different aspect <strong>of</strong> trust), but <strong>the</strong> inter-actor trust that is enabled by <strong>the</strong>
institutional environment.
Rus and Iglič (2005) note that <strong>the</strong> information and expectations regarding <strong>the</strong> potential trustworthiness
<strong>of</strong> a partner comes from two fundamentally different sources: a) obtained directly by personal
experience and communication with an actor or group <strong>of</strong> actors, and b) obtained indirectly, via <strong>the</strong>
institutional framework that enables (or hinders) trust-based relations. The first is usually referred to
as inter-personal trust, whereas <strong>the</strong> latter – institutional trust.
Inter-personal trust is a process-based trust linked with <strong>the</strong> aspects <strong>of</strong> personal communication, i.e.
persons’ ability to create and maintain trustworthy relationships by emphasizing such practised by
personal qualities as integrity and benevolence. This kind <strong>of</strong> trust usually is very endogenous to each
firm or industry and depends on family, group or o<strong>the</strong>r personal relations, when individuals meet in <strong>the</strong>
different types <strong>of</strong> environments (e.g. workplace, business meetings, informal networks, golf clubs,
family/groups organized events etc.) that in turn makes positive influence <strong>the</strong> economic performance
<strong>of</strong> <strong>the</strong> organization (Bennett and Robson, 2004). According to Abrams et al. (2003), inter-personal
trust encompasses two forms <strong>of</strong> trust: trust in a person’s competence and trust in a person’s
benevolence, which are both <strong>of</strong> crucial importance in <strong>the</strong> knowledge-sharing networks. The interpersonal
trust is <strong>of</strong>ten characterised by <strong>the</strong> strong ties and closeness <strong>of</strong> relations and is embedded in
highly cohesive groups. In sociological terms, it is more characteristic to <strong>the</strong> Gemeinschaft type <strong>of</strong>
communities. Yet <strong>the</strong> over-reliance on inter-personal trust may lead to <strong>the</strong> exclusion <strong>of</strong> outsiders with
<strong>the</strong> potentially valuable resources (Rus and Iglič, 2005).
Institutional trust represents <strong>the</strong> opposite to inter-personal trust in that it is related to <strong>the</strong> existence <strong>of</strong>
legal, political and economic bureaucratic systems and is derived from institutional environment <strong>of</strong>
laws, norms and standards (Luhmann, 1979). Thus, <strong>the</strong> institutional trust is closely related to formal
environment, in which <strong>the</strong> interactions <strong>of</strong> individuals and organizations are taking place. The
institutions provide <strong>the</strong> “rules <strong>of</strong> <strong>the</strong> game” to <strong>the</strong> parties <strong>of</strong> <strong>the</strong> transaction and perform <strong>the</strong> role <strong>of</strong> <strong>the</strong>
“third-party guarantor”. Usually, <strong>the</strong>y stem from <strong>the</strong> external environment <strong>of</strong> <strong>the</strong> firm, that, for example,
includes memberships <strong>of</strong> business associations, governmental regulation mechanisms, various
systems <strong>of</strong> product standardization (e.g. ISO) etc. When relying on institutional trust, firms can
diminish <strong>the</strong> chance <strong>of</strong> risk, as various control bodies, through incentives and sanctions, may ensure
organizations’ compliance with <strong>the</strong> basic “rules <strong>of</strong> <strong>the</strong> game”. The institutional trust promotes <strong>the</strong>
Gesellschaft-type <strong>of</strong> social relationships. Bachmann and Inkpen (2011) note that institutions play a
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